Netlist, Inc. (NASDAQ:NLST) Stock Craters on Decision

Netlist, Inc. (NASDAQ:NLST)

Netlist, Inc. (NASDAQ:NLST) stock cratered after two decisions by two different courts gave the chip manufacturer a win and a loss. NLST shares were down over 50% by the close of business today to close at $0.24 on a volume over 24 times its listed daily average.

Court of Appeals Decision

Yesterday, the U.S. Court of Appeals for the Federal Circuit affirmed earlier decisions from the U.S. Patent Trial and Appeal Board (PTAB) confirming the validity of certain claims of Netlist’s U.S. Pat. Nos. 8,001,434 (434 Patent) and 8,359,501 (501 Patent).

Netlist’s 434 Patent and 501 Patent cover self-test technologies widely used in LRDIMMs, SSDs, and Storage Class Memory. Netlist, Inc. (NASDAQ:NLST) asserted these patents as part of a seven-patent lawsuit against SanDisk and Diablo Technologies. SanDisk and Smart Modular filed a total of six petitions for Inter Partes Review (IPR) challenging the validity of these two patents, which have now been resolved in Netlist’s favor by the Federal Circuit. If they so choose, the decision can be appealed to the U.S. Supreme Court.

U.S. International Trade Commission Finding

However, Netlist, Inc. (NASDAQ:NLST) also lost its case when the Administrative Law Judge Bullock of the United States International Trade Commission (ITC), issued a Notice of Initial Determination (ID) in its investigation of SK hynix RDIMM and LRDIMM enterprise memory products. According to the notice, ALJ Bullock determined that no violation of section 337 of the Tariff Act has been found with respect to Netlist’s patents in Certain Memory Modules and Components Thereof, and Products Containing Same, Investigation No. 337-TA-1023.

The parties and their counsel have not yet received the full ID, which is subject to confidentiality restrictions. Netlist anticipates its counsel will receive this document within the next few days. Netlist will determine at that time whether further comment on the decision is appropriate. A public version of the ID will be available within 30 days.

The ID is now subject to review by the Commissioners at the ITC. Netlist, Inc. (NASDAQ:NLST) intends to petition for review of any findings in the ID it believes are incorrect. The Commission will then decide whether to review portions of, or the entire ID. Once the issues under review have been briefed, the Commission may affirm, set aside, or modify the portions of the ID under review. These conclusions will be contained in a Final Determination which is currently scheduled to be issued by the Commission by March 14, 2018.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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